A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

Budget Part II - MassHealth Cuts Puzzlement

Budget Part II - MassHealth Cuts Puzzlement

January 28, 2011

[This is our second report on the Governor's FY 12 budget proposal. Our earlier entry looked at public health.]

The Governor released his recommended FY 2012 budget yesterday, and saving money in health care programs, particularly MassHealth, was a major focus. The budget is accompanied by detailed information from the administration (see the main budget page with links to everything). There are two somewhat overlapping budget policy papers from the administration, here and here. Together they start to explicate the administration’s take on health care in the budget.

As always, the best instant summary analysis comes from the Mass Budget and Policy Center; their health care summary gets all the highlights onto a single, readable page. The T&G and Globe each did stories on the health side of the budget that include interest group reactions.

In total, MassHealth spending will be $800 million less than it would otherwise be. Because of the federal match, the subtraction of $800 million in overall spending only saves the state budget half that amount, or $400 million. If passed, we would be foregoing $400 million in federal revenue to the state, which could be used to support jobs and the economy.

The State House News Service put the subtitle “Health Care Puzzle” over their report on the health budget. We join them in still having more questions than answers in figuring out how the savings are going to happen.

To start, the key health coverage programs for the poor – MassHealth, Commonwealth Care and the Health Safety Net – have their benefits and eligibility mostly maintained. Cuts made in the past few years, like eliminating many dental services for adults, are not restored. Given the need to find deep savings to balance the budget, we are grateful that deeper cuts, like those other states are considering, are not being proposed in Massachusetts. The budget does tighten MassHealth adult day health benefits, and raises copays yet again. The total savings from this is $66 million. Given that this is a “no-tax” budget, we don’t understand the justification for raising fees on the poorest of the poor, particularly because the state has to share half of the copay revenue with the federal government.

Provider rates of payment are mostly frozen, and some are rolled back, pushing out further the promise of chapter 58 of getting closer to rate parity. The savings from rate actions is $150 million. Some savings ($50 million) are anticipated from the start of a program to integrate care for disabled dual eligibles, those getting both Medicare and Medicaid benefits. A similar program for seniors has improved care while saving money.

But the bulk of the savings comes from ill-defined “Capitation Cost Controls” - $169 million; and “Procurement and Payment Strategies - $351 million. The narrative doesn’t really say what this entails, other than a commitment to reorganize provider arrangements to ensure access and improve quality, at a lower cost. That’s the puzzle.

The Medicaid populations are sicker than average, and have unique social needs. While we strongly support using payment incentives to provide integrated care and promote health and wellness, it is critical that any dramatic steps be carefully considered before being imposed on providers and beneficiaries. We want to make sure that MassHealth members have meaningful pre-input in these changes. While we all support the goal of improving quality and access at a lower cost, getting from here to there is going to take enormous effort and communications. We see that the supplemental budget, also filed yesterday, includes funding for a new "medicaid delivery model commission." We want to know more about that, and look forward to learning about the administration’s plans, and for true engagement aimed at a solution that works for the neediest Bay Staters.
-Brian Rosman